The final judgment: regulators, too, were far from Equitable

It was worth the wait. The Parliamentary Ombudsman's report into Equitable Life, which has taken four years to see the light of day, found catastrophic failure on the part of government regulators over a decade and has recommended an apology and a government compensation scheme.

The specific findings of the Ombudsman, Ann Abraham, are damning. In the run-up to the crisis, the regulators were 'passive, reactive and complacent', failing to question Equitable's annual returns, failing to resolve issues over its solvency and failing to establish how it could afford to pay out bonuses. They also allowed its then boss, Roy Ranson, to run the company as a personal fiefdom.

From 1998 to the end of 2000, when Equitable closed its doors, they were aware of problems but their actions were 'largely ineffective and inappropriate,' and they allowed the insurer to remain open on an unsound basis. They let it submit misleading returns, in which its apparent solvency position was flattered by a reinsurance deal which had 'no economic substance at all'.

Most shocking, during 2001 the regulators gave a misleading impression to policy holders and the public by falsely stating that Equitable had always been solvent for regulatory purposes and by giving assurances that it had always met its other regulatory requirements.

I can personally vouch for their complacency: at a lunch only days before the insurer shut up shop, I was shocked when one senior official opined that this would not be such a terrible outcome for savers.

Seemingly, he was impervious to the damage this would cause not only to individual victims, but also to wider public confidence in pensions savings.

Alistair Darling will not respond formally to the report until the autumn but the attitude of this government has been to resist claims for compensation, and to imply that the policy holders were 'well-heeled' and so somehow undeserving - an oddly Old Labour slant on the affair. The company, this argument goes, brought about its own misfortunes, so taxpayers should not be forced to pay for it.

The men who ran Equitable were indeed primarily responsible, though the regulators have let them escape relatively lightly. Ranson was expelled from the actuarial profession last year, but he is in his late seventies and entitled to a substantial free pension from his former employer. On account of his age, he was not punished by the Financial Services Authority.

His lieutenant, Chris Headdon, is serving a six-year ban meted out by the FSA from holding a senior position in the financial services industry. It expires in 2010, quite possibly sooner than the victims will receive payouts. He will be in his early fifties, still young enough to make more money to add to the £95,000 pension he is due to receive from the Equitable staff scheme.

It is true that it will be hard - very hard - for the government to find the £4.6bn or so that policyholder action groups reckon will be needed to pay compensation. The budget deficit for last month was the worst June figure ever recorded, and people are questioning whether the Equitable victims are the most deserving recipients of scarce cash. My view is that compensation should be paid, despite the obvious difficulties.

First, the notion that all Equitable customers are wealthy is not true. The average policy was enough to buy a pension of just £70 a week, not riches beyond the dreams of avarice. If some savers are a bit posh, so what? It doesn't make the persistent failures of the regulators more acceptable. Do people really believe it is OK for City regulators to fail horribly, and for the government to ignore the Ombudsman, so long as wrongdoers only milk the middle class?

Second, the government is not being asked to bail out investors because of the misdeeds of the insurer's management, which would be morally hazardous, but because of the inadequacies of its own departments and regulatory bodies. Third, if ministers defy the Ombudsman, who provides a vital safeguard for the public, that will be an outrageous show of contempt for her office and its role in holding governments to account. It hardly encourages better regulation in the City if the government flouts its own watchdog.

BP will dig deep on Russian oil venture

DON'T EXPECT BP to pull out of its TNK joint venture in Russia without an almighty fight. The oil giant is locked in a bitter battle with its Russian oligarch partners over control of TNK-BP, and its chief executive Robert Dudley is under threat of being forced out of the country.

Some are saying that BP should extricate itself from Russia as best it can, but its boss, Tony Hayward, does not see it that way. TNK-BP is an important test case for investment in Russia, with a great deal at stake. The Kremlin wants control of Russian oil and gas assets, but cannot afford to scare away Western companies which bring hard cash and technical expertise.

BP believes the row is more about money than politics: it reckons the oligarchs want to gain control of the venture so they can eventually sell out at a higher price to state controlled Gazprom or fellow oil giant Rosneft.

Despite the oligarchs' complaints about TNK-BP's performance under Dudley, the joint venture has added an estimated $26bn to their wealth in five years. It is understandable that BP is not inclined to roll over to the billionaires as the venture provides a fifth of reserves and a quarter of production.

However, the fear is that the tycoons, who have outmanoeuvred it in the past, will do so again.

Rush to invest in this go-ahead journalist

Banks and housebuilders are having trouble persuading their shareholders to stump up fresh capital through rights issues as a way to patch up their ailing finances, as we have seen with the HBOS debacle this weekend. There has been plenty of comment on the shortcomings of rights issues, but the real problem, one sardonic fund manager told me, is that they are not an option for individuals when they need an injection of cash. How true. I could do with one myself, couldn't you?